CompanyX is based in North Carolina and is hiring employees. Even though the job is completely remote, they require that the person resides in NC.
If it’s a job that’s 100% remote, then why do I have to reside in NC? I assume it’s an income tax issue, but wanted to confirm.
I’m a US citizen that lives in Hawaii. Besides moving to NC, What change would I need to make so that I pay NC income tax? I can travel anytime to NC.
Most likely the company isn’t set up to handle taxes in other states and doesn’t want to deal with that complexity. Realistically, you’d need to move to NC to become a tax resident there. If you travel to NC often enough that you’re spending most of the year there, you should be able to claim tax residence there but that sort of travel isn’t in most people’s budgets. And your current state might still have a claim on your income in which case the company would still be required to withhold taxes appropriately, pay into your current state's unemployment and worker's compensation funds, etc. which is what it is likely trying to avoid by hiring only NC residents.
It is also possible that the company doesn’t want to deal with other ancillary state level employment laws. Colorado, for example, requires job ads to include a salary range so some companies exclude Colorado residents from remote positions so they don’t have to comply with the law. If this is the company’s concern, it would be extremely difficult to deal with short of changing your permanent address.
The less likely reason: They want you to be near enough to come to the office if there is an emergency. It would take me 2 1/2 hours each way to go to the office, which would be a pain but doable.
The more likely reason: Law compliance. That company in X always had employees living in X. They know the laws, regulations, tax regulations etc. in X. They don't know these things in Y. If they hire someone from Y, there's a big risk that the company would unknowingly do things that are illegal in X or Y. Too much of a risk.
Unlikely reason: The company may have received money from state X to create jobs in X (or even from a town) and hiring in Y would be against that deal.
BTW. Companies close to a state border might have always had plenty of employees from a neighbouring state. In that case they might hire remote workers in these two states, because they know the laws in both states.
I am not an expert on the tax topic, but I will try to answer your questions as below.
The reason may very well be related to the NC state income tax.
In addition, it could be that the company gets some special tax deduction or grant or funding from the local government or the state of NC.
Therefore, the company may prefer giving jobs to local residents either to meet the requirements for the special tax deduction and grant or simply to show a good will gesture from the company's perspective. (Just a guess).
To pay NC income tax, I guess all you have to do is to move to NC before the start date of your employment at that company, and change your driver license to NC. Then, you become an NC resident before your first day of work, and will pay NC income tax.
